In a new case, Lake Lindero Homeowner Association v. Barone, the Court of Appeals described and enshrined the interplay between the law and an association's bylaws. The Court also provided guidance regarding quorum requirements to associations dealing with recall elections.
In Lake Lindero, the Association received a recall petition, but failed to provide notice of a special meeting within the required 20-day period. The petitioning owners called the special meeting and conducted the recall election themselves using an independent third-party inspector of elections.
The bylaws required at least 50% of all members to vote to achieve a quorum. The inspector conducted the election meeting on the specified date and announced a quorum was not present, because it received fewer than 50% of all member ballots. A majority of members present at the election voted to adjourn the meeting to a new date.
At the reconvened meeting, the inspector determined the Association had met the reduced required quorum of 25% percent of the membership. Of the 190 ballots received, 156 votes were in favor of recalling the entire board. Having determined the recall passed, the inspector proceeded to certify the election of the new board.
The new board terminated the CEO, Christopher Barone, who was then named as a defendant in the lawsuit after refusing to cede control. Barone argued that the reduced quorum language in the bylaws did not apply to the recall process and, therefore, the reconvened meeting had not met quorum.
The Court of Appeals disagreed with Barone's contention and found no conflict between the reduced quorum language in the bylaws, and Corporations Code Sections 5034, 7222, and 7512. More specifically, the Court found that neither section 5034 nor section 7222 affected minimum quorum requirements. The relevant statute is section 7512.
Section 7512, subdivision (a) provides:
“One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum.” Subdivision (b) stipulates that “[w]here a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon . . . by less than one-third of the voting power are matters notice of the general nature of which was given.”
Consistent with section 7512, the Association's bylaws authorized a quorum of 25 percent of the voting power after an adjournment. The Court determined the vote validly at the reconvened meeting recalled the former board under the Association's bylaws and governing statutory law.
Associations should be extremely mindful of reduced quorum requirements when dealing with recall elections. Many associations assume that a failure to make quorum marks the end of a recall, but as the Court in Lake Lindero indicated, that is not always the case. If the bylaws allow for a reduced quorum at an adjourned meeting, and the members vote to adjourn a meeting to a later date, that reduced quorum requirement could result in a new board taking office.
